Skip to main content

Silver Outshines Gold as Alternative Investment Asset

 

Silver, which rose at more than twice the rate of gold last year, continues to outperform its more lustrous peer, and in the process, has narrowed its gap with gold, or the gold-silver ratio. The ratio, which was 80 a year ago, has since halved and experts feel it could come down further, implying one may be better off buying silver than gold. In the calendar year to date, silver has yielded a 17% return compared with gold which has gained a meagre one-fifth of a per cent since January. While the ratio is an indicator of how prices have moved over time, analysts say it is only one of the several factors which should be considered while taking an investment decision.


"There is still a lot of interest in silver," said Rajan Venkatesh, MD, bullion, ScotiaMocatta, a division of Scotiabank, the largest seller of precious metals among banks in India. "There is a strong possibility that, as a defensive investment option, the prices of silver may go up further from this level because of volatility in many economies globally. Gold will also rise but it may not see the same upside as silver." Precious metals have had a good run in the wake of lingering uncertainty over the longevity of economic recovery. While the emerging markets, notably India, China and Brazil, recovered rapidly from the economic slowdown, fears of a double-dip recession hung over most developed countries for much of last year.


The worries have receded in the US following the second round of quantitative easing — the decision by Federal Reserve to drive down interest rates by buying bonds — and extension of Bush tax cuts resulting in most economists upping growth estimates to 4-4.5% in 2011. But much of Europe and Japan remain mired in uncertainty, and even in the US, fears of inflation stoked by the expansion in money supply have caused some to turn to precious metals. The price for an ounce (31.10 gms) of silver stood at $35.91 last Friday while that of gold was $1417.5. Last year, gold yielded a return of 23% while silver prices shot up more than twice that level. Analysts feel that with rising prices, demand for gold, which is perceived as a quasi currency, may slow but that of silver is unlikely to because apart from being a precious metal, it also has industrial uses. "The price appreciation in silver has created a short-term opportunity, over a quarter, wherein money could be made by buying silver and selling gold with the ratio narrowing further," said Sonam Udasi, head of research, IDBI Capital. However, experts caution that investors should trade such strategies only under the expert guidance of brokers.


Agency data show that in 2009, global industrial demand for silver was 48% against jewellery demand of 21%. Also, with gold becoming costlier, silver is being perceived as an alternate investment option and commodity funds are moving money into it. "The ratio must not be viewed as the sole factor in a person's decision of whether to buy silver or to sell gold, or even the other way round," said Jayant Manglik, president, Reliagare Commodities. "The ratio plainly indicates that silver is overvalued but nobody can tell when it arrives at its normal level of 55-60." The gold-silver ratio is simply how many more times expensive gold is to silver — a higher ratio indicates that silver is undervalued while a lower ratio means that silver is overvalued and could correct.


According to Religare Commodities, India is the largest consumer of silver in the world and 2010 was a banner year with imports increasing by 25% over the previous year to touch 1,200 tonnes. Along with domestic mining and recycling, the annual traded number is closer to 4,000 tonne. This uptrend in demand is likely to continue with increasing affluence, awareness about portfolio diversification and industrial demand. Almost 60% of silver is used as jewellery followed by about 25% in investment and coins. The rest 15% goes into industrial applications like metallurgy and electronics applications. Expert traders on overseas markets normally take positions on the Comex division of New York Mercantile Exchange (Nymex), while back home exchanges such as MCX, the leader in non-farm products' futures, and NCDEX offer futures platforms to actual users and speculators. The prices of gold and silver on local futures markets reflect the overseas price movements adjusting for dollar-rupee fluctuation. Since India is a leading importer of gold, consuming around 700 tonne annually, a rise in the rupee makes gold cheaper and a fall makes it dearer. If gold has risen on the overseas market, the local price may cap the rise if the rupee strengthens against the dollar. However, a fall in the rupee could make gold costlier than on the overseas market.

 

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now